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and exciting. and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here.
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. coming up later on in the "cnn newsroom," valerie harper
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fwlaif the face of a terminal cancer diagnosis. hln's jane velez-mitchell on the jodi arias case and breaking down the ncaa march madness brackets. speaking of march madness, it's hitting washington in a different way. with no budget deal in sight, is a government shutdown less than two weeks away? ali velshi has answers. after almost four years of not having a budget, new proposals. the bad news, neither will ever pass. welcome to "your money." i'm ali velshi. both sides of the aisle are digging their heels into the dirt, but the nonpartisan congressional budget office won't even look at them because they are so vague. here's senator patty murray on the democratic budget. >> the senate budget reflects the budget that the american people went to the polls and
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supported last november. >> both budgets have names. the senate democrats so-called foundation for growth budget is the first resolution that the senate democrats have put ut in about four years. it would raise more tax revenue, selectively curb spending, and reduce deficits enough to stabilize the debt but not balance the budge net ten years' time. now here's what the house republicans promise. >> our budget will provide economic security for families. it will guarantee a secure retirement for seniors. it will expand opportunity for the young. >> paul ryan's latest edition of his path to prosperity budget isn't too different from previous versions. he plans to maintain revenue lefls, curing spending. the president is way behind on his february 4th deadline to put forward a proposal and he doesn't have much time left. >> my goal is not to chase a balanced budget just for the
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sake of balance. my goal is how do we grow the economy, put people back to work. >> america doesn't really have a budget right now. it has a continuing resolution, which is an extension of an earlier budget. that continuing resolution expires on march 27th. if congress goes beyond that without at least a patch, the government could shut down. by law, we're supposed to have an actual budget resolution voted on and in place by april 15th. but as i said, we are way behind on that. and then on may 18th, we're set to hit the debt ceiling. some say that's going to be the real showdown. annie lowry is the economic policy reporter with "the new york times." nancy cook is the economic and fiscal correspondent for the "national journal." annie, both sides put budgets out. everybody knows neither one is going anywhere. what happens next? >> eventually we'll go through
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the same sort of continuing resolution process you've seen in the last couple years. the budgets are political documents. they'll probably both pass their respective houses but there's almost no way to bridge the gap between them and they're very vague documents. again, these are kind of political postures. we'll go through the same sort of slow process of appropriating money through continuing resolution that we've last the last couple years. >> the budgetary process, central to what the government is supposed to do, not supposed to be a political process, sure, the government's priorities but it's technical where everybody tries to come together and hammer it out. when people say things -- nancy, they say this a lot, everybody putting forward budgets and they've been failing. these are not really budgets. these are vague things. do the impossible, nancy, and tell us how we get to a budget. >> well, the tricky thing is that the two parties really have very fundamental disagreements about how we should raise money for the federal government, through taxing people, and how we should spend money. and so the middle ground would
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be some sort of agreement on those things but as we saw in the fiscal cliff just coming to an agreement to extend the tax cults was a huge lift and really done at the last minute. these are huge disagreements that the two parties still have. >> annie, the clock is ticking. can we expect to see a budge fret the president that is going to appeal to both parties? from what he's been saying, it doesn't sound like they're anywhere close to what nancy just described. >> no. and the president is going to put out a budget in early april. and regardless of its content, republicans are going to po pose it fundamentally because they'll oppose anything the president puts forward. i think instead what we'll see is an appropriations process that keeps funding the government at the current levels including probably the sequester. it seems like both parties have kind of agreed that's the path forward. they'll start looking at cults to entitlement programs, start
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looking at reducing tax expenditure, and we veal a fight over where that money from cutting loopholes and celts and deductions in the code is going to go to, whether to bring down tax rates or reducing the deficit further. >> nan, si, we'll talk about it later in the show, but the fact is the business world, investing world, housing world seems to be ignoring what's going on. come march 27th we don't have a patch, we could have a shutdown. come may 18th, we could breach the debt ceiling again. give me your sense of how series these matters are and what's likely to happen. >> sure. i think congress will come to some sort of agreement next week before taking a two-week recess to keep funding the government. they will pass a continuing resolution this week. i don't think that will be a big issue. the question sort of moving forward is what's going to be the fight surrounding the debt ceiling. the republicans want to use that as an opportunity to make deeper cuts to entitlement programs. part of the president's outreach this week to republicans has been to remind them he's put on
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the table as part of a bigger deal about $400 billion to cuts in medicare and medicaid as well as about $130 billion in chain cpi, which would be, you know, a shift in the way we calculate some federal benefits. soy think that the contours of a deal will come if it does come at all around the debt ceiling fight and the months leading up to that. >> nancy, good to see you. thanks very much. nancy cook, economic fiscal policy correspondent, "national journal," annie lowery, economic policy reporter at "the new york times." paul ryan calls his budget the path to prosperity. mitt romney hope ld it would be the path to the presidency. that didn't work out. but ryan will not be deterred. >> i am proud of our budget because it's changed the conversation. today we are not talking about cliffs or ceilings or sequesters. we're talking about solutions. and that's how it should be. >> forget the democrats. could paul ryan be dealing with some anger from his own party?
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i'll ask one of the sharpest business minds in the senate, republican johnny isakson. that's next. during the break, tweet me. let me know if you think it's time for republicans to move past the ryan budget or with the election aside it's obama and the democrats who need to budge. lobsterfest is the king of all promotions. there's nothing like our grilled lobster and lobster tacos. the bar harbor bake is really worth trying. [ male announcer ] get more during red lobster's lobsterfest. with the year's largest selection of mouth-watering lobster entrees. like our delicious lobster lover's dream, featuring two kinds of lobster tails. or our savory, new grilled maine lobster and lobster tacos. my favorite entree is the lobster lover's dream. what's yours? come celebrate lobsterfest and sea food differently. [ male announcer ] visit now for an exclusive $10 coupon on two lobsterfest entrees.
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transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process.
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so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. here we go again, another budget from paul ryan, another lightning rod for democrats to attack the gop's economic proposals. remember when mitt romney picked paul ryan to be his running mate? we predicted then it would turn a spotlight on paul ryan's budget proposals and we were right. joe biden and president obama wasted no time using it to bludgeon the gop nominees. >> romney said, quo, it was marvelous and that had he been president if it passed he would sign it. now, that same budget, the ryan budget, the "new york times" in the past called him, i quote, the most extreme budget plan by a house of congress in modern
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times. >> i want to bring in republican senator johnny isaacson of georgia, former businessman and member of the senate finance committee, good friend to the show. good to see you. thanks for being with us. >> great to be here. >> paul ryan's budget is similar to the one he proposed last year you just heard joe biden criticizing. and by the way to the one that came up the year before. every time paul ryan releases a budget democrats call it a voucher program that will saddle seniors with extra costs. under paul ryan's plans, american who is turn 65 in 2024 or later would choose between private health insurance plans or they could stick with their traditional medicare option. they'd get a subsidy from the federal government to put toward the cost of their premium. the first year, the subsidy would cover the cost of the second least expensive private plan or the medicare option, whichever is cheaper. in later years the subsidy would go up based on a competitive bidding process. senator, paul ryan pitched his proposals to voters in last year's election and the
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republicans lost. why do we keep bringing up something that doesn't seem to be getting public support? >> first of all, we did a bad marketing job from a year ago in the election. let me talk to you about what i think we should be saying. first of all, you acknowledge anybody 55 years or older is preserved for medicare as they know it today. those younger will go to a new program of premium support which allows the government to control the cost and the growth rate in medicare much better than service reimbursement and preserves medicare for future generations. this is a question of do you want to preserve medicare or lose it, because if we do nothing, medicare will be gone in the not-too-distant future. >> it is a tough sell because the reality is in order to preserve it, someone's going to get cut and that is going to open you up to criticism from democrats who say that while you've got a proposal that is going to reduce some taxes on wealthy american, we're cutting people on medicare. in fact, if the ryan budget were to become law, wealthy americans would get a sizable tax cuts,
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there would be two tax brackets, 10% and 25%, instead of the current seven we have. low-income americans wouldnt be affected by that. some middle-income americans would benefit. but according to the left-leaning citizens for tax justice, the average millionaire making more than $3 million would pay $203,000 less in taxes if they give up all their tax breaks. if they done, they pay $345,000 less. so senator, the problem with the proposal is he doesn't say where he'll make up for the lost revenue. where do you get a sense the cuts are going to come from? >> well, in terms of the budget that was proposed by the house of representatives, cuts are coming primarily or savings are coming primarily from reform of social security, medicaid, and medicare, as well as cults in discretionary spending moving some away from defense into other areas to tf the government. the difference in the two budget, the ten-year prospect of
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that passed in the house of representatives is $41 trillion spending over the enyears. senate budget approved thursday night by the senate budget committee spends $46 trillion. so you've fgot two differences. the senate is trying to spend more. house republicans are trying to be more efficient. >> let me ask you this, senator. president obama is trying a new strategy. he's reaching out to congress, holding meetings on capitol hill. i don't understand why these weren't happening 18 months ago. but there's a shift from the campaign-style events we've seen over the last month. listen to something he said to george stephanopoulos earlier this week. >> i'm trying to create an atmosphere where democrats and republicans can get together and try to get something done. but ultimately it may be that the differences are just too wide. if their position is we can't do any revenue or we can only do revenue if we gut medicare or gut social security or gut medicaid. if that's the position, then we're probably not going to be able to get a deal. >> probably not going to be able to get a deal.
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is it still possible to bridge the partisan divide now that democrats and republicans are having to line up behind their very different budget proposals? >> first of all, he said it may be that we can't cross the divide. he said "may." that's an iffy reference. yesterday in the luncheon, i was sitting two people away from the president when he was asked the question about the quote on stephanopoulos' program and he said i want to look at this as a problem we can't solve rather than a problem we can't solve. republicans don't want to raise tax rates but expenditure reform like simpson/bowles produces revenue. as long as the president addresses entitlements, there's a possibility to make a deal. there will have to be sacrifice, a different approach, be positive attitudes. but i underline the word he used was "may," meaning we could do it. >> you are an optimist, senator. that's why i like having you on the show. you're a businessman and one of i think eight senators who supported simpson/bowles. you are optimistic about it,
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then so am i. republican from georgia, and he is part of the senate finance committee. thank you for being with us again. >> thanks, ali. coming up, despite washington's dysfunction, we're experiencing something of an economic renaissance in this country. i've been saying it for months. if you need more convincing, now the economist is on board. it says mesh's growth prospects are much brighter than they seem. (train horn) vo: wherever our trains go, the economy comes to life. norfolk southern. one line, infinite possibilities.
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if you watched if show before, you've heard me say this before -- america is a runner on the road to an economic renaissance. the housing market is coming back. nationally prices rose more than 7% last year. domestic energy boom under way, extracting record amounts of oil and shale gas through fracking and other technologies. that's pushing down prices for natural gas, used in part to generate electricity. that helps utilities and heavy industry compete and that creates more jobs for americans. the jobs picture is improving.
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first-time unemployment claims are falling back to prerecession levels. last to the u.s. economy added 236,000 jobs. 36th month of consecutive private sector job growth. there is real reason for optimism. but i've also warned you about this -- dysfunction in washington threatens to trip our runner, the u.s. economy, just as it struggles to gain speed. which way is this thing going to go? christine romans is the host of "your bottom line." edward mcbride is the washington, d.c., bureau chief for the economist. ed, welcome to the show. you have written a special report on america's competitiveness and you're with me on this. you say we should cheer up from infrastructure to education to immigration, despite glaring problems where you are in washington, the outlook is less bleak than pessimists maintain. make your argument. >> that's absolutely right. the special report goes through all the areas where there's usually a lot of handwringing about how america is doomed to decline, education, infrastructure, as you mentioned, a host of others, and basically looks at the arguments
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there and discovers that they're very much exaggerated, that there's reason for optimism. and generally the reason people are pessimistic is because they focus too much on what's going on in washington, d.c., where nothing is going on, right, sort of political gridlock, and focus too little on what's going on in the rest of the country and in cities and states around the country, governors, mayor, state legislators are looking at these problems and coming up with encouraging creative solutions to the sorts of things that we're used to thinking can't be fixed in america. >> christine, take ed's point that if we paid less attention to washington we might be more optimistic. even if we ignored washington, every renaissance has its risks. what else are they other than washington? >> in america we've been worried to risks to the american dream since about 1492. we fret about the american dream and model. a lot of people look at the stock market and say this is an example of this renaissance we're on the verge of, the storm at record highs. but there are a lot of folk who
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is say, look, the reason why the stock market is at record highs, three little letters -- f-e-d. the fed. listen to what jim rogers said this week. >> if you give me a trillion dollars, i'll show you a good time, too. they're throwing money out the window into the marks and it's going somewhere. >> so let's think about that for a minute. how much of this renaissance is being driven by the fed in the short term? talk about the longer-term investments we need to have a true american renaissance in the next century but in the short term many say renaissance is really federal reserve stimulus into the economy. >> at least that part that is the stock market, that part that is the housing market, but ed, this week treasury secretary jacob lew visited a seeman's plan in georgia to get a firsthand look at what he sees as a manufacturing renaissance. listen to what he had to say. >> i think if you look at the job creation numbers over the last year, 18 months, it's been clear that we've seen steady growth in manufacturing jobs.
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you're here today in a facility that has -- is proof that there is a bright future to american manufacturing. >> ed, here's the thing our viewers need to know. manufacturing output is actually up after years of declines, up for the last few years. it's not actually resulting in proportionate growth in manufacturing jobs in america, which is what most of my viewers will be interested in hearing. are we getting jobs out of this? >> well, you have to, as christine just did, separate the short term and the long term. the special report that i've written attempts to look at the long term. i think in the long term the prospects are very good. you know, america is in this incredibly competitive position regarding energy, very cheap natural gas, which is one of a big input for lots of industries. you know, that helps with manufacturing. america's education system is being turned upside down in a way that i think people don't realize. a whole series of reforms, you know, from how teachers are paid, what the curriculum is, how state of the unions are
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tested. all this stuff is changing. and if infrastructure, another one, we're always worried about how the federal government doesn't have enough money for infrastructure, and at the moment it doesn't, that's right. but if you look around the country, public/private partnerships, new forms of trust to channel private investment into infrastructure, we're finding ways to deal with these problems that the u.s. has at the moment. and in a few years that should pay off. >> music to my ears. ed mcbride, washington bureau chief with the economist. thanks for joining us. christine romans is the host of "your bottom line." this ship is the latest pr headache for carnival. but travelers are still booking trips on the high seas. are investors jumping overboard? and could this finally be it? the device that dethrones apple as the king of smartphones? i'm still a blackberry guy. ♪ [ male announcer ] start with an all new award winning car. good. now find the most hard core driver in america. that guy, put him in it. what's this?
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as some can be life-threatening. tell your doctor if you have a history of heart or blood vessel problems, or if you develop new or worse symptoms. get medical help right away if you have symptoms of a heart attack or stroke. use caution when driving or operating machinery. common side effects include nausea, trouble sleeping and unusual dreams. people around you...they say, you're much bigger than this. and you are. [ male announcer ] ask your doctor if chantix is right for you. [ babies crying ] surprise -- your house was built on an ancient burial ground.
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$6 billion of shareholder money because of a bad trade and then tries to hide it by manipulating its results, one might expect the ceo of that company to be shown the door. that is not the case with jpmorgan and it ceo jamie die monday. in fact, he did not even testify in two days of hearings this past week in front of a senate investigation subcommittee. that committee led by senator john mccain and senator carl levin spent nine months investigating what has come to be known as the london whale trade that led to those $6 billion worth of lozs for the bank. the london whale refers to trader in the investment office in london who made a series of risky trades. carl levin said the bank ignored the risk. >> it exposes a derivatives trading culture at jpmorgan, the piled on risk, the hidden losses, the disregarded risk limits, the manipulated risk models, the dodged oversight and that misinformed the public.
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>> to be fair, dimond took a 50% pay cut last year and accepted some responsibility for the losses. but the lack of oversight inside big banks more than four years after the financial crisis has to make you wonder if anything has changed. banks are now required to hold more capital in their books to brace themselves from financial losses. this week the federal reserve approved the capital plans of 16 of the nation's 18 largest banks as part of the final leg of their so-called stress tests. only two banks failed those tests, allied financial and bbt. the federal reserve asked jpmorgan and goldman sachs to resubmit their plans later this year for further review. still, there are plenty of critics out there that say banks are still too big and unwielding. remember this guy? >> i'm not in favor of breaking up the large banks.
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but if push comes to shove and there is no other way to eliminate the too big to fail problem, which is getting worse, better, has not improved since the crisis began, i would be in favor of breaking up the banks. four years after the financial crisis, banks are still behaving badly. is history doomed to repeat itself? >> yes! it's simple! i mean, we have to put up with the banks because we need them because they lubricate the economy. but they are not lovable creatures designed for the philanthropic good of man and beast. the only way forward is either very strong direction of management from the top or regulation. i'm afraid the former has been seen to fail so it's the latter that has to succeed. >> all this about the london whale, a $6 billion trading loss. it begs the larger question of what kind of financial
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regulations have been put into effect since the crisis, what kind of real oversight is there. that particular issue of the london whale, by the way, it was absorbed completely by the bank's profits. it didn't pose a threat to the overall -- >> it could have done. the argument against that is that if it had become systemic, we were lucky in that case it wasn't, but if it had we would have -- >> that aside, there are a lots of people who say banks are a great investment right now. should this nonsense worry you? should you be concerned -- >> the banks have small, well capitalized medium tier banks. >> don't be confused with whether it's a good investment with whether or not public policy dictates they should be constrained, restrained or broken up. two different arguments. >> we're still fighting about banks the same way we were fighting about them four years ago. we could have had this conversation four years ago. >> let's talk tech. the samsung galaxy s-4 burst onto the scene this week.
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getting mixed reviews. no word on the price. but it should be available to all major cell phone carriers in the next couple months. one big draw features the latest android operating system, a five-inch screen, big, but you can see it clearly, a pixel display as good as any smartphone you'll see these days. at we have complete specs and review. but look at the market. my beloved blackberry is somewhere in that other category. >> the silver. >> a nokia isn't even mentioned by name. >> biggest player in the world. does the this device, which by the way you can use your eye to do things with, can charge wirelessly, sounds neat, does this become number one not just by numbers but by mind share? >> also a pedometer.
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you could be looking at -- but here's what is really interesting. so at the road show for this, there's all this criticism today about whether it was maybe kind of sexist. can we roll the video? it was a little weird. someone told me it was the cross between a broadway show and a "star trek" convention. this new item, this new device. bizarre song and dance, women drunk up as drunken housewives, apparently. reporters who didn't exactly know what it was all about, i guess. >> what do you think, rich snard. >> do not confuse bad taste with sexism. >> i'm just saying it's weird. >> these launches have taken on a life of their own. flash mobs and stuff. i couldn't care less. >> remember the old cars we used to go to with the beautiful women? >> my, my. >> but the point is do we think samsung has a product -- let's just move on from this
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conversation. test it out yourself. another pr disaster. >> before you get to that, how do we know if it's going to be number one? because if we did know we would not be sitting here talking to you. >> that's right. i'd be flying to you to my yacht from my helicopter. not on a cruise ship, though. another disaster for karn very well cruise lines. the carnival dream turned out to be a nightmare, generator problems, reports of overflowing toilets again, although i've heard that being disputed. made it to port in st. maarten, not a bad place to get stuck. the cruise will not continue. passengers have been flown back to florida, a three-day refund and half off on a future cruise. i'm sure they'll book. and now word the legend is having trouble maintaining speed. carnival's stock price in the last three months also having trouble maintaining speed. engine room fire crippled a ship in the gulf of mexico in
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february, called the triumph. christine, you say cruises are the fast food of travel. what does that mean? >> that means they're available to anybody. everybody can get a bite of the big mac that is a carnival cruise ride. this is the only way a lot of people in america will see the world. if you're a family with $55,000 a year, two kids, $100 a day for four day, going to be able to see cozumel or parts of mexico or the caribbean, this is a very efficient way for people to get a lot of calories with a little bit of cost. >> i love them snop they're great fun. take it on its own terms. you enjoy what's there. >> you can travel with other people who don't want to do the same things that you do. like sit by the pool and eat. >> in that order. >> it show, doesn't it. >> enough of our own personal travel delights and desires. as for carnival, this really depends on whether or not it's a run of bad luck or what we journalists call dog bites charges, you hear one then
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another then another but it's really no worse than normal or is there something systematically wrong. >> and watching the chairman at a miami heat game when several thousand people were on that horrible cruise, tells me -- >> no different from tony hayward of bp being on his sailing ship at the time of the gulf of mexico disaster. >> but he lost his job and there's no indication mickey aaronson loses his. >> stay right where you are. the dow has had its longest winning streak in more than a decade. markets are hot, helping the rich get richer. i want to know what you think. tweet me now@alivelshi. does a record-breaking stock market help everyone even if you're not invested? the patient, presented with
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a hairline fracture to the mandible and contusions to the metacarpus. what do you see? um, i see a duck. be more specific. i see the aflac duck. i see the aflac duck out of work and not making any money. i see him moving in with his parents and selling bootleg dvds out of the back of a van. dude, that's your life. remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. i see lunch. [ monitor beeping ] let's move on. [ male announcer ] find out what a hospital stay could really cost you at
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it is time for a little q&a. my good friend richard quest, host of "quest means business" on cnn international. welcome. good to see you. we've been talking about this, markets on a tear, the dow with its longist winning streak in more than a decade. i think both of us agree bull market or not, most people should stay invested in stocks for the long haul and take advantage of market movements. but to help build wealth you have to do it that way. here in the united states, almost half of all people surveyed by gallup say they have no exposure to the stock market. the next question is, does a record-breaking market help everyone? i'll go first. >> for a change. >> for a change. give me 60 seconds from the ring of the bell. all right, richard. the answer is a resounding yes. in the united states, 47% of americans do not invest in stocks so almost half the country has a gain directly from the dow's almost 8,000-point climb since the lows on march
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9th of 2009. the broader s&p 500 and the even broader wilshire 5,000 are in record territory as well. this is driven, as christine said, in large part by the fed. historically low interest rates mean that outside of buying a home, which takes time and a lot of capital, the stock market is the only game in town if you want to build wealth unless you'd rather rob a bank or marry a rock star. but even if you're not invested in the stock market, a record market creates wealth, it spurs investment, it encourages spending, and hence it creates jobs, so while it doesn't benefit everyone equally, stock markets do trickle down, and more importantly it's accessible to more people than those who simply choose to invest. do i have more time? two seconds. if you don't play, you can't win. [ bell ] go for it. >> how i wish just once you would actually answer the question in an educated and
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informed way and not go for the jugular. the only answer is yes and no. >> that's definite. >> of course the stock market benefits everyone through their 401(k) plans that they're invested in, through the wealth effect, through improved corporate profitability, through the consumer confidence numbers. yes, the rising tide does lift all boats. but if it was only that simple. unfortunately, you know and i know even if ali velshi doesn't know, it is not that simple because in an era when so many people who are directly invested in stocks are showing double-digit gains, it is those poor at the bottom who will never get a chance to get that sort of wealth that quite rightly say they are not involved. the only problem is it is the only game in town. >> yeah. that's the problem. on that we agree. richard, always good to see you. richard quest, the host of "quest means business" on cnn
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international. i was in texas last week and one of that state's most powerful politicians told me it's true, everything is bigger in texas, including job creation and economic growth. should the rest of the country adopt the texas miracle? promoti. there's nothing like our grilled lobster and lobster tacos. the bar harbor bake is really worth trying. [ male announcer ] get more during red lobster's. with the year's largest selection of mouth-watering lobster entrees. like our delicious lobster lover's dream, featuring two kinds of lobster tails. or our savory, new grilled maine lobster and lobster tacos. my favorite entree is the lobster lover's dream. what's yours? come celebrate lobsterfest and sea food differently. [ male announcer ] visit now for an exclusive $10 coupon on two lobsterfest entrees. you want to make sure it goes up and stays up. [ chirp ]
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it's a phoenix with 4 wheels. it's a hawk with night vision goggles. it's marching to the beat of a different drum. and where beauty meets brains. it's big ideas with smaller footprints. and knowing there's always more in the world to see. it's the all-new lincoln mkz. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars
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in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. americans have been fighting at taxes since this country began. remember the phrase no taxation without representation? fast forward to 2013, still arguing about taxes. there's a convention nap wisdom lower tacks are best, promote economic growth. but one of the best things to project is the real effect taxes have on the economy. increases and decreases never happen in a vacuum. take a look at the top tax rates since 1950. after world war ii, the top tax rate was more than 90%. right now it's 39.6%. the argument that we pay really high taxes historically doesn't hold up. in the meantime, the economy saw its fair share of ups and downs. this chart shows gdp on a yearly
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basis, those years extending down were recessions. the average growth rate since world war ii is a respectable 3.25%. we'd be very happy to have that today. i spoke with the lieutenant governor of texas, david d dewhurst this week in austin. he's probably the most powerful man in texas and the most powerful lieutenant governor in the country because he writes the legislation, controls the budget and is head of the texas senate. texas has been trying to lure companies away from california and other states with the promise of lower taxes and lighter regulation, something people are calling the texas miracle. >> we're 48th out of 50 states in per capita state spending. we've kept our taxes low. we're 47th out of 50 states in per capita state taxes. over the last ten years i've cut taxes over 51 times and expect a 52nd and a 53rd this year. and we've worked real hard, had the lightest regulatory hand we
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possibly could. so when businesses look at texas, we want to make it irresistible to come into texas, invest, create new jobs, which creates new sales tax revenue for the state so we can make yet further cuts in our taxes. eduardo porter is a columnist at "the new york times." will cain, you've seen him before here, a cnn contributor. eduardo, lieutenant governor dewhurst, is he right? should washington take a page out of texas' book? >> well, the claim that lower impacts will produce economic growth has been tried at the national level for years. i mean, since the reagan administration. and, in fact, we don't really have any good evidence that it has worked, that low taxes do stimulate higher economic growth. i would suggest the evidence does not really support the lieutenant governor. >> i'm going to guess you disagree with that. >> yeah. do low taxes lead to economic growth? let me ask you this, and i'll ask you, eduardo. if we add a top marginal tax
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rate of 98%, would it have a negative economic impact? >> if you were not going to keep any of the money you make by work. >> by that same logic, lower taxes lead to economic growth. you suggest you node the exact pinpoi place to diminish your effort and moving from 35 to 40%, that will have a lot of import in your decisions. >> not only do we agree taxes have some impact we can go into the things the lieutenant governor talked about and look at difference states and who is benefitting now. >> has certain other advantages. they have oil. it is also benefitting from the fact the state doesn't need to collect the state taxes because they get money from the federal government and cities get high property taxes. texas has a high property tax burden. >> it is true. i have read, eduardo wrote an article. >> the blessings of low taxes remain unprooud. it is worth a read. >> he compared the united states economic growth to that of european countries and other countries across the world.
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if you look at a more domesc level, the democracies, the laboratories of federalism here, what you see is texas isn't alone. chief executive writes of the top ten states for economic growth or where they like to locates their business, it is not just texas, it is indiana, states across the south. they're led by people and this will sound partisan, the republicans are pursuing the policies like low taxes and low regulation. >> you're from texas where there is no state or income tax as we talked about or even state property tax. governments have to get the revenue from somewhere and that's where the true tax picture gets a little more muddled. cities and towns across texas levy the highest local property taxes in the country, forced to because they get so little revenue from the state. i challenged the governor on that point and he stuck to his guns. listen to what he said. >> the state government go et cetera no benefit from property taxes and we do not have an income tax. our whole economy from a state perspective is driven by consumer confidence. right now our consumer
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confidence is high because people know that we're not going to raise taxes and we're going to keep this state pro growth and friendly to business coming in investing in creating new jobs. >> so investing in creating new jobs, this is a conversation we have a lot on this show. investing has been a bad word to use lately. what if you did think of your tax money whatever amount that is as an investment, in other words, things that will reward generations who may get stuck paying the bill. >> the question is who is a better steward of your dollars? is there a third party, we call that third party the government, who is better in a better position to spend your money than you are? i think economic history has proven it is no. >> who is it going to build the equivalent of a highway system or water delivery. >> not an argument for anarchy, not an argument for no taxes. it is an argument for lower. >> i think this is the stuff we agree to do together. >> i don't know if i said that.
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that's very popular. >> you quoted it. you used that. do you agree there is a role for tax money to be used for those purposes? >> absolutely. absolutely. i also agree with that and the tax policies don't exist in a vacuum. you said it as well. low regulation as well or somewhat strong infrastructure and those things all maerlt. the point here is taxes matter as well and in texas is the proof. >> i would like to revert to what you mentioned earlier, the compare sob across countries. we have extremely low tax burdens compared to every other advanced nation in the world. around like 40 years ago we were roughly the same. a quarter of our dme and right now every other country moved to 35% and we have stuck at 25%. that hasn't hurt their growth. we're roughly middle of the table and we do have much higher inequality. there are also trade offs. there is things the government can do that our government has not done. >> it will go on many months.
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eduardo is a columnist with the "new york times." you heard me warn before of economic storm and my next guest says silicon valley is at risk of being hit by an economic tycoon as a result of washington's dysfunction. innovation under attack from your government next on your money. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting. and maybe, most remarkably, not that far away.
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we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here. [ male announcer ] from the way the bristles move to the way they clean, once you try an oral-b deep sweep power brush, you'll never go back to a regular manual brush. its three cleaning zones with dynamic power bristles reach between teeth with more brush movements to remove up to 100% more plaque than a regular manual brush. and even 76% more plaque than sonicare flexcare in hard to reach areas. oral-b deep sweep 5000 power brush. life opens up when you do. ♪ it was the best day ♪ ♪ it was the best day yeah! ♪ it was the best day ♪ because of you [sigh] [echoing] we make a great pair. huh? progressive and the great outdoors --
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he heard how spending cuts can hurt the u.s. reduction in head start, fewer food inspectors and the cuts aren't just an immediate threat.
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they will hurt the u.s. over the long-term. the u.s. government funds over 60% of basic research and development in the united states. federally funded research and development faces a $12.5 billion cut this year according to the information technology and innovation foundation. that will result in about 200,000 job losses. economic output will be reduced by 203 billion by 2021, small businesses will suffer, too. the small business administration faces a 5% cut, around $4 billion less for small businesses that depend on government have thes and the sba has less money to mentor entrepreneurs and help them compete for the government contracts. michael freytag is the founder and ceo of and he is i think the youngest ceo on the fix the debt commission. >> i think. >> you said when a butterfly flaps its wings in washington dc there is p

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CNN March 16, 2013 10:00am-11:00am PDT

News/Business. Ali Velshi. CNN anchors break down the financial news of the week. New.

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